Brazil Business Confidence

Brazil: Business confidence deteriorates in November

November 30, 2015

Business sentiment fell in November, erasing October’s gains, according to the Getulio Vargas Foundation (FGV, Fundaçao Getulio Vargas) business confidence indicator. The index decreased a seasonally-adjusted 1.8% over the previous month, falling from October’s 76.2 points to 74.8 points. As a result, the index remains far below the 100-point threshold and signals that businesses are more pessimistic than optimistic.

According to FGV, firms were more pessimistic in November regarding their expectations for the future economic situation. In contrast, firms’ expectations of the current economic situation remained stable.

The FGV introduced a new methodology for tendency surveys in November 2015. Historical data from June 2014 until present have been revised according to the new methodology.

Panelists surveyed for this month’s LatinFocus report see fixed investment falling 11.6% in 2015, which is down 0.2 percentage points from last month’s forecast. For 2016, panelists expect fixed investment to fall 5.4%, which is down 0.9 percentage points from the previous month’s estimate.

Retail sales (excluding cars and construction) fell 1.5% from the previous month in seasonally-adjusted terms in December, which contrasted November’s revised 1.0% increase (previously reported: +0.7% month-on-month).
Declines were seen nearly across the board, with only two of the eight components of the index seen growth in sales.

At its 7 February meeting, the Central Bank of Brazil’s Monetary Policy Committee (Comité de Politica Monetaria, COPOM) decided to cut the benchmark SELIC interest rate by 25 basis points, a smaller cut than the 50 basis-point reduction it made at the previous meeting.